Wage Expense and Wages Payable

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prqjneqf76

Business Finance

Description

Green corp has 3 employees.  Each earns $600 per week for a 5 day work week ending on friday.  this month the last day of the month falls on wednesday.  the company should make which of the following adjusting entries.

1. credt wage expense $360 - debit wage payable 360

2 dbt wage expense 1080 - credit wage payable 1080

3 crdt wage expense 1080 - debit wage payable 1080

4 debit wage exp 360 - credit wage payable 360

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Explanation & Answer

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Determine what they earn in a day

=600/5

$120

For three days  they would have earned 120 * 3 which is $360

Wages Expense is an income statement account. Wages Payable is a current liability account that is reported on the balance sheet.

4 debit wage exp 360 - credit wage payable 360

Liabilities are credited while assets are debited

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